With far too many issues raised in a day to address, none of which had anything to do with Jeffrey Epstein, Trump ran the gamut from criminalizing protected free speech in an Executive Order criminalizing the burning of the American flag (and announcing the sentence to be imposed for doing so!), to violating the Posse Comitatus Act by federalizing National Guard units to perform law enforcement functions when there is no local request or emergency**
To cap off the day, President Trump “fired” member Lisa Cook of the Federal Reserve Board of Governors. By firing her and replacing her with one of his guys, it would give Trump a majority of the Board and enable him to dictate monetary policy, among other things, to his performative advantage of reducing the interest rate at the expense of sound economic policy.
Trump twitted a letter to justify his actions. Under the Federal Reserve Act of 1935, the president can remove a fed governor for cause. Trump claimed that allegations of mortgage fraud against Cook by Trump loyalist Bill Pulte, director of the Federal Housing Finance Agency, who has used his position to dig up allegations against Trump’s enemies justify her removal.
Mr. Pulte specifically claimed that Ms. Cook had committed mortgage fraud, alleging that she improperly designated both a condominium in Atlanta and a home in Ann Arbor, Mich., as her primary residence when taking out loans. In doing so, Mr. Pulte said, Ms. Cook had “falsified bank documents and property records” in a way that allowed her to obtain a lower interest rate.
Pulte referred his allegations to Attorney General Pam Bondi for criminal prosecution. Notably, Cook has neither been indicted nor convicted of any crime. The irony of Trump, whose liability for doing the same was just upheld even though the amount of disgorgement was found to violate the excessive fines clause of the Eighth Amendment, goes without saying. But that didn’t give Trump pause.
“The Federal Reserve has tremendous responsibility for setting interest rates and regulating reserve and member banks,” he said in his letter. “The American people must be able to have full confidence in the honesty of the members entrusted with setting policy and overseeing the Federal Reserve. In light of your deceitful and potentially criminal conduct in a financial matter, they cannot and I do not have such confidence in your integrity.”
Are mere allegations, particularly when it’s purely pretextual given that the underlying motive is for Trump to put one of his minions on the Board of Governors, sufficient to establish cause for removal?
Under the Federal Reserve Act, the law that charters the central bank, Mr. Trump may dismiss a governor only if he can demonstrate cause, typically defined as professional neglect or malfeasance. In recent days, legal experts have questioned whether the president could satisfy that burden, given the fact that the allegations against Ms. Cook have not been proved in court and involve personal matters.
There is a question whether the president has the power under Article II to fire anyone he wants in the Executive Department, with or without cause. But even as the Supreme Court has undermined the precedent of Humphrey’s Executor to allow the president to fire members of board created to be independent of politics, it has suggested the Federal Reserve is different and beyond the president’s authority.
Is the Fed different from other independent agencies?
The Supreme Court seems to think so. Even as it let Mr. Trump fire two agency leaders in May, the unsigned majority opinion said the Fed may well warrant special protection. “The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,” the opinion said.
One might suspect President Trump, of all people, to have a slight sensitivity to the presumption of innocence, given the two impeachments, four indictments, and one felony conviction he’s been through. Apparently not, or at least not that he cares enough about to let mere unproven allegations get in his way. In light of the fact that this is happening so he can seize control of the Fed, the allegations by Pulte being little more than his excuse, does he have the authority to remove Lisa Cook? Should he? Assuming there’s any merit to the allegations, should Cook have the opportunity to challenge them before cause could be found? Does Trump care?
*Tuesday Talk rules apply.
**Is it an emergency because the facts and circumstances dictate or because the president says so? In the District of Columbia, Trump declared a “crime emergency” when there was nothing emergent about it. But if the president says so, then emergency it is, giving the president vast powers to address actual emergencies?